The company intends to continue its disciplined approach to capital allocation to strengthen its portfolio and deliver stockholder value through multiple levers, which may include, over time, acquiring hotels or investing in our portfolio.

In 2023, the company completed the Marriott transformational capital program, which began in 2018. Management believes this program will position these hotels to be more competitive in their respective markets and will enhance long-term performance through increases in RevPAR and market yield index.

Similar to the Marriott transformational capital program, the company reached an agreement with Hyatt in 2023 to complete transformational reinvestment capital projects at six properties in our portfolio. The total investment is expected to be approximately $550 million to $600 million.

The company has successfully navigated challenges from Maui wildfires and Hurricane Ian, with the Hyatt Regency Coconut Point Resort and Spa reopening to hotel guests in November 2022, as part of a phased reopening, and the Ritz Carlton, Naples reopening in July 2023.

As expected, margins during the year faced downward pressure in comparison to 2022 following the ramp up in operations that year as our managers returned to stable staffing levels at our properties, while occupancy remained 8 percentage points below 2019 levels.

The company is pursuing opportunities to enhance asset value through select capital improvements, including projects that are designed to increase the eco-efficiency of our hotels, incorporate elements of sustainable design and replace aging equipment and systems with more efficient technology.

The performance of the lodging industry traditionally has been affected by the strength of the general economy and, specifically, growth in gross domestic product. Changes in travel patterns of both business and leisure travelers may create difficulties for the industry over the long-term and adversely affect our results of operations.

Since we have elected REIT status, Host Inc. must finance its growth and fund debt repayments largely with external sources of capital because it is required to pay dividends to its stockholders in an amount equal to at least 90% of its taxable income (other than net capital gain) each year to qualify as a REIT.

Our third-party hotel managers are dependent on information technology networks and systems, including the internet, to access, process, transmit and store proprietary and customer information. Any compromise of our managers' or their critical third-party networks could result in a disruption to our managers' operations, such as the disruption in fulfilling guest reservations, delayed bookings or sales, lost guest reservations, or compromises to information.

The lodging industry is highly competitive. Our principal competitors are other owners and investors in upper upscale and luxury full-service hotels, including other lodging REITs.

The growth of internet reservation channels also is a source of competition that could adversely affect our business. A significant percentage of hotel rooms for individual or “transient” customers are booked through internet travel intermediaries.

Many management contracts for our hotels do not prohibit our managers from converting, franchising or developing other hotels in our markets. As a result, our hotels compete with other hotels that our managers may own, invest in, manage or franchise.

Hotel operating expenses represent approximately 99% of our total operating costs and expenses. These costs increased due to increases in salaries and wages, as well as on the level of service and amenities that are provided.

Management fees. Base management fees are computed as a percentage of gross revenues. Incentive management fees generally are paid when operating profits exceed certain thresholds.

Other property-level expenses. These expenses consist primarily of real and personal property taxes, ground rent, equipment rent and property insurance. Many of these expenses are relatively inflexible and do not necessarily change based on changes in revenues at our hotels.

Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.

We design and assess our program using components of the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).

We rely on the security systems of our managers to maintain hotel operations and to protect proprietary and hotel customer information.

On August 3, 2022, Host Inc.'s Board of Directors authorized an increase in the existing program to repurchase Host Inc. common stock up to $1 billion. As of December 31, 2023, we have $792 million available for repurchase under the program.

On May 31, 2023, we entered into a distribution agreement with J. P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million.

During 2023, Host Inc.'s Board of Directors declared dividends totaling $0.90 per share on its common stock, including a fourth quarter special dividend of $0.25 per share.

Environmental Stewardship: We are investing in solutions that conserve and restore natural capital to assist us in mitigating climate change and biodiversity impacts with the goal of achieving best-in-class returns.

Social Responsibility: We are committed to advancing health, well-being and opportunity for all of our stakeholders, including investors, employees, partners and communities.

Governance: Our responsible investment strategies are guided by executive and board-level oversight, our EPIC values of Excellence, Partnership, Integrity and Community, our ethical standards, and a disciplined approach to risk management and sustainable value creation.

The performance of the lodging industry traditionally has been affected by the strength of the general economy and, specifically, growth in gross domestic product. Because lodging industry demand typically follows the general economy, the lodging industry is highly cyclical.

In addition to general economic conditions affecting the lodging industry, new hotel room supply is an important factor that can affect the lodging industry's performance and overbuilding has the potential to further exacerbate the negative impact of an economic downturn.

We are subject to the risks associated with natural disasters and the physical effects of climate change, including more frequent or severe storms, droughts, hurricanes, flooding, earthquakes, wildfires, power shortages or outages and extreme temperatures, any of which could have a material adverse effect on our hotels, operations and business.